COSO Releases Updated Internal Control Framework

On May 14, 2013, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) released its revisions and updates to the1992 document Internal Control - Integrated Framework. COSO’s goal in updating the framework was to increase its relevance in the increasingly complex and global business environment so that organizations worldwide can better design, implement, and assess internal control. COSO believes this framework will provide organizations significant benefits; for example, increased confidence that controls mitigate risks to acceptable levels and reliable information supporting sound decision making.

COSO is a joint initiative of five private sector organizations and is dedicated to providing thought leadership through the development of frameworks and guidance on enterprise risk management, internal control, and fraud deterrence. The AICPA is a member of COSO.

In recognizing technological and business developments along with increased corporate risks, the need to codify existing principles and supporting attributes, as well as provide expanded guidance on nonfinancial reporting, COSO issued the updated framework for public comment in December 2011. Along with 200 other individuals and organizations, the AICPA provided its comments. The framework retains the core definition of internal control and the five components of a system of internal control. Companies that already have an effective system of internal control should not experience additional responsibilities under the clarified framework.

COSO has released several documents in conjunction with their announcement.

Bill Schneider, Director of Accounting at AT&T and Member of the AICPA Board of Directors and the COSO Advisory Council gives an overview of the work COSO has undertaken to update the internal control framework and explains what the project might mean for a CPA.